American Eagle Outfitters Reports 2015 Annual EPS Growth of 73% to $1.09
Fourth Quarter EPS Rises to $0.42
PITTSBURGH–(BUSINESS WIRE)–American Eagle Outfitters, Inc. (NYSE:AEO) today reported EPS of $0.42
for the fourth quarter ended January 30, 2016, a 17% increase from EPS
from continuing operations of $0.36 for the comparable quarter last year.
The company also announced EPS from continuing operations of $1.09 for
the year ended January 30, 2016, compared to adjusted EPS from
continuing operations of $0.63 for the year ended January 31, 2015, a
73% increase. The EPS figures refer to diluted earnings per share.
Jay Schottenstein, Chief Executive Officer commented, “Initiatives to
strengthen our merchandise and improve operational execution fueled
strong results in 2015. The American Eagle brand delivered solid growth
and Aerie exceeded our expectations.”
“As broadly reported, the fourth quarter was a challenging period for
the apparel industry due to a number of macro factors. Despite this, we
achieved sales growth and a modest increase in operating income. We are
encouraged that our spring season is off to a good start against
positive results last year. Our focus in 2016 will center on continuous
merchandise improvements, elevating our efforts on customer acquisition
and optimizing the strength of our operations and brands. I’m confident
in our ability to drive further growth and deliver shareholder returns,”
he continued.
Fourth Quarter 2015 Results
-
Total net revenue increased 3% to $1.11 billion from $1.07 billion
last year. -
Consolidated comparable sales increased 4%, compared to flat
comparable sales last year. -
Gross profit increased 3% to $388 million and the gross margin rate
remained flat to last year at 35.1% of revenue. A slight improvement
in markdowns, favorable product costs and lower rent expense were
offset by higher incentive costs. Delivery costs related to a strong
direct business also increased. -
Selling, general and administrative expense of $233 million increased
3% from $227 million last year. The increase in dollars was primarily
the result of higher incentive costs and planned investments in
digital marketing, which were offset by a one-time gain on the sale of
the previously closed Warrendale, PA distribution center. As a rate to
revenue, SG&A leveraged 10 basis points to 21.1%. -
Operating income increased 3% to $116 million from $112 million last
year, and the operating margin remained flat to last year at 10.5% as
a rate to revenue. -
The tax rate was 27.9% in the quarter as the result of income tax
settlements, higher federal tax credits, and tax strategies. -
EPS of $0.42 increased 17% from EPS from continuing operations of
$0.36 last year.
Fiscal Year 2015 Results
The following discussion is based on Non-GAAP results, as presented in
the accompanying GAAP to Non-GAAP reconciliation.
-
Total net revenue increased 7% to $3.52 billion from $3.28 billion
last year. -
Consolidated comparable sales increased 7%, compared to a 5% decrease
last year. -
Gross profit increased 13% to $1.3 billion and leveraged 180 basis
points to 37.0% as a rate to revenue. The improvement in the gross
margin was primarily due to lower markdowns and rent leverage,
partially offset by higher incentive costs. -
Selling, general and administrative expense of $835 million increased
3%, and leveraged 90 basis points to 23.7% as a rate to revenue.
Savings that resulted from expense reduction initiatives offset higher
incentive costs related to strong sales and margin performance. -
Operating income increased 55% to $320 million. The operating margin
increased 280 basis points to 9.1%. -
EPS from continuing operations of $1.09 increased 73% from adjusted
EPS from continuing operations of $0.63 last year.
Inventory
Total merchandise inventories at the end of the fourth quarter increased
9% to $305 million compared to $279 million last year, consistent with
our guidance. The increase is primarily due to earlier receipts, as the
company lapped last year’s delays caused by the port slow down.
Inventories are well positioned, with clearance units down in the high
single digits. First quarter 2016 ending inventory at cost is expected
to be down in the low single digits.
Capital Expenditures
In 2015, capital expenditures totaled $153 million. For fiscal 2016, the
company expects capital expenditures to be in the range of $160 to $170
million.
Cash, Share Repurchases
The company ended the quarter with total cash of $260 million compared
to $411 million last year. During the quarter, the company repurchased
14.6 million shares for $212 million. The remaining authorization under
the current repurchase program is for 2.8 million shares, which expires
on January 28, 2017.
Store Information
In the quarter, the company closed 21 AE and 1 Aerie stand alone stores.
Internationally, the company opened 15 licensed stores during the
quarter, including the first stores in Bahrain and Oman. Since the
beginning of Fiscal 2014, the company has closed 76 AE and 26 Aerie
stores. The company continues to expect to meet its goal of closing 150
stores by the end of Fiscal 2016. For additional fourth quarter 2015
actual and fiscal 2016 projected store information, see the accompanying
table.
First Quarter Outlook
Based on an anticipated mid single digit increase in comparable sales,
management expects first quarter 2016 EPS to be approximately $0.17 to
$0.19. This guidance excludes potential asset impairment and
restructuring charges, and compares to EPS of $0.15 last year.
Conference Call and Supplemental Financial Information
Today, management will host a conference call and real time webcast at
4:15 p.m. Eastern Time. To listen to the call, dial 1-877-407-0789 or
internationally dial 1-201-689-8562 or go to http://investors.ae.com
to access the webcast and audio replay. Also, a financial results
presentation is posted on the company’s website.
Non-GAAP Measures
This press release includes information on non-GAAP financial measures
(“non-GAAP” or “adjusted”), including earnings per share information.
These financial measures are not based on any standardized methodology
prescribed by U.S. generally accepted accounting principles (“GAAP”) and
are not necessarily comparable to similar measures presented by other
companies. The company believes that this non-GAAP information is useful
as an additional means for investors to evaluate the company’s operating
performance, when reviewed in conjunction with the company’s GAAP
financial statements. These amounts are not determined in accordance
with GAAP and therefore, should not be used exclusively in evaluating
the company’s business and operations.
About American Eagle Outfitters, Inc.
American Eagle Outfitters, Inc. (NYSE: AEO) is a leading global
specialty retailer offering high-quality, on-trend clothing, accessories
and personal care products at affordable prices under its American Eagle
Outfitters® and Aerie® brands. The company operates more than 1,000
stores in the United States, Canada, Mexico, China, Hong Kong and the
United Kingdom, and ships to 81 countries worldwide through its
websites. American Eagle Outfitters and Aerie merchandise also is
available at 141 international stores operated by licensees in 22
countries. For more information, please visit www.ae.com.
“Safe Harbor” Statement under the Private Securities Litigation Reform
Act of 1995: This release contains forward-looking statements, which
represent our expectations or beliefs concerning future events,
including first quarter 2016 results. All forward-looking statements
made by the company involve material risks and uncertainties and are
subject to change based on factors beyond the company’s control. Such
factors include, but are not limited to the risk that the company’s
operating, financial and capital plans may not be achieved and the risks
described in the Risk Factor Section of the company’s Form 10-K and Form
10-Q filed with the Securities and Exchange Commission. Accordingly, the
company’s future performance and financial results may differ materially
from those expressed or implied in any such forward-looking statements.
The company does not undertake to publicly update or revise its
forward-looking statements even if future changes make it clear that
projected results expressed or implied will not be realized.
AMERICAN EAGLE OUTFITTERS, INC. | |||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||
(Dollars in thousands) | |||||||||
January 30, | January 31, | ||||||||
2016 | 2015 | ||||||||
(unaudited) | |||||||||
ASSETS | |||||||||
Cash and cash equivalents | $ | 260,067 | $ | 410,697 | |||||
Merchandise inventory | 305,178 | 278,972 | |||||||
Accounts receivable | 80,912 | 67,894 | |||||||
Prepaid expenses and other | 77,218 | 70,477 | |||||||
Total current assets | 723,375 | 828,040 | |||||||
Property and equipment, net | 703,586 | 698,227 | |||||||
Intangible assets, net | 51,832 | 47,206 | |||||||
Goodwill | 17,186 | 13,096 | |||||||
Non-current deferred income taxes | 64,927 | 73,137 | |||||||
Other assets | 51,340 | 37,202 | |||||||
Total Assets | $ | 1,612,246 | $ | 1,696,908 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
Accounts payable | $ | 182,789 | $ | 191,146 | |||||
Accrued compensation and payroll taxes | 79,302 | 44,884 | |||||||
Accrued rent | 77,482 | 78,567 | |||||||
Accrued income and other taxes | 22,223 | 33,110 | |||||||
Unredeemed gift cards and gift certificates | 48,274 | 47,888 | |||||||
Current portion of deferred lease credits | 12,711 | 12,969 | |||||||
Other current liabilities and accrued expenses | 40,901 | 50,529 | |||||||
Total current liabilities | 463,682 | 459,093 | |||||||
Deferred lease credits | 50,104 | 54,516 | |||||||
Non-current accrued income taxes | 4,566 | 10,456 | |||||||
Other non-current liabilities | 42,518 | 33,097 | |||||||
Total non-current liabilities | 97,188 | 98,069 | |||||||
Commitments and contingencies | – | – | |||||||
Preferred stock | – | – | |||||||
Common stock | 2,496 | 2,496 | |||||||
Contributed capital | 590,820 | 569,675 | |||||||
Accumulated other comprehensive income | (29,868 | ) | (9,944 | ) | |||||
Retained earnings | 1,659,267 | 1,543,085 | |||||||
Treasury stock | (1,171,339 | ) | (965,566 | ) | |||||
Total stockholders’ equity | 1,051,376 | 1,139,746 | |||||||
Total Liabilities and Stockholders’ Equity | $ | 1,612,246 | $ | 1,696,908 | |||||
Current Ratio | 1.56 | 1.80 |
AMERICAN EAGLE OUTFITTERS, INC. | |||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||
(Dollars and shares in thousands, except per share amounts) | |||||||||||||
(unaudited) | |||||||||||||
13 Weeks Ended | |||||||||||||
January 30, | % of | January 31, | % of | ||||||||||
2016 | Revenue | 2015 | Revenue | ||||||||||
Total net revenue | $ | 1,105,828 | 100.0 | % | $ | 1,071,853 | 100.0 | % | |||||
Cost of sales, including certain buying, | |||||||||||||
occupancy and warehousing expenses | 717,877 | 64.9 | % | 696,043 | 64.9 | % | |||||||
Gross profit | 387,951 | 35.1 | % | 375,810 | 35.1 | % | |||||||
Selling, general and administrative expenses | 233,020 | 21.1 | % | 226,721 | 21.2 | % | |||||||
Depreciation and amortization | 39,295 | 3.5 | % | 36,879 | 3.4 | % | |||||||
Operating income | 115,636 | 10.5 | % | 112,210 | 10.5 | % | |||||||
Other (expense) income, net | (2,262 | ) | -0.2 | % | 1,552 | 0.1 | % | ||||||
Income before income taxes | 113,374 | 10.3 | % | 113,762 | 10.6 | % | |||||||
Provision for income taxes | 31,668 | 2.9 | % | 43,688 | 4.1 | % | |||||||
Income from continuing operations | 81,706 | 7.4 | % | 70,074 | 6.5 | % | |||||||
Loss from discontinued operations, net of tax | – | 0.0 | % | (8,465 | ) | -0.7 | % | ||||||
Net income | $ | 81,706 | 7.4 | % | $ | 61,609 | 5.8 | % | |||||
Basic income per common share: | |||||||||||||
Income from continuing operations | $ | 0.43 | $ | 0.36 | |||||||||
Loss from discontinued operations | – | (0.04 | ) | ||||||||||
Net income per basic share | $ | 0.43 | $ | 0.32 | |||||||||
Diluted income per common share: | |||||||||||||
Income from continuing operations | $ | 0.42 | $ | 0.36 | |||||||||
Loss from discontinued operations | – | (0.04 | ) | ||||||||||
Net income per diluted share | $ | 0.42 | $ | 0.32 | |||||||||
Weighted average common shares | |||||||||||||
outstanding – basic | 191,697 | 194,606 | |||||||||||
Weighted average common shares | |||||||||||||
outstanding – diluted | 194,259 | 195,627 | |||||||||||
52 Weeks Ended | |||||||||||||
January 30, | % of | January 31, | % of | ||||||||||
2016 | Revenue | 2015 | Revenue | ||||||||||
Total net revenue | $ | 3,521,848 | 100.0 | % | $ | 3,282,867 | 100.0 | % | |||||
Cost of sales, including certain buying, | |||||||||||||
occupancy and warehousing expenses | 2,219,114 | 63.0 | % | 2,128,193 | 64.8 | % | |||||||
Gross profit | 1,302,734 | 37.0 | % | 1,154,674 | 35.2 | % | |||||||
Selling, general and administrative expenses | 834,700 | 23.7 | % | 806,498 | 24.6 | % | |||||||
Loss on impairment of assets | – | 0.0 | % | 33,468 | 1.0 | % | |||||||
Restructuring charges | – | 0.0 | % | 17,752 | 0.6 | % | |||||||
Depreciation and amortization | 148,156 | 4.2 | % | 141,191 | 4.3 | % | |||||||
Operating income | 319,878 | 9.1 | % | 155,765 | 4.7 | % | |||||||
Other income, net | 1,993 | 0.0 | % | 3,737 | 0.1 | % | |||||||
Income before income taxes | 321,871 | 9.1 | % | 159,502 | 4.8 | % | |||||||
Provision for income taxes | 108,580 | 3.1 | % | 70,715 | 2.2 | % | |||||||
Income from continuing operations | 213,291 | 6.0 | % | 88,787 | 2.6 | % | |||||||
Gain (loss) from discontinued operations, net of tax | 4,847 | 0.1 | % | (8,465 | ) | -0.2 | % | ||||||
Net income | $ | 218,138 | 6.1 | % | $ | 80,322 | 2.4 | % | |||||
Basic income per common share: | |||||||||||||
Income from continuing operations | $ | 1.10 | $ | 0.46 | |||||||||
Gain (loss) from discontinued operations | 0.02 | (0.04 | ) | ||||||||||
Net income per basic share | $ | 1.12 | $ | 0.42 | |||||||||
Diluted income per common share: | |||||||||||||
Income from continuing operations | $ | 1.09 | $ | 0.45 | |||||||||
Gain (loss) from discontinued operations | 0.02 | (0.04 | ) | ||||||||||
Net income per diluted share | $ | 1.11 | $ | 0.42 | |||||||||
Weighted average common shares | |||||||||||||
outstanding – basic | 194,351 | 194,437 | |||||||||||
Weighted average common shares | |||||||||||||
outstanding – diluted | 196,237 | 195,135 |
AMERICAN EAGLE OUTFITTERS, INC. | ||||||
GAAP to Non-GAAP reconciliation | ||||||
(Dollars in thousands) | ||||||
(unaudited) | ||||||
52 Weeks Ended | ||||||
January 31, 2015 | ||||||
Diluted | ||||||
income per | ||||||
Operating | common | |||||
income | share | |||||
GAAP Basis from Continuing Operations | $ 155,765 | $ 0.46 | ||||
Add back: Asset Impairment and Corporate Overhead Reduction Charges(1): | 51,220 | 0.17 | ||||
Non-GAAP Basis from Continuing Operations | $ 206,985 | $ 0.63 | ||||
% of Total Net Revenue | 6.3% |
(1) Non-GAAP adjustments consist of $33.5 million of corporate and store
asset impairments and $17.7 million of severance and related employee
costs and corporate charges.
AMERICAN EAGLE OUTFITTERS, INC. | ||||||
COMPARABLE SALES RESULTS BY BRAND | ||||||
(unaudited) | ||||||
Fourth Quarter | ||||||
Comparable Sales | ||||||
2015 | 2014 | |||||
American Eagle Outfitters, Inc. (1) | 4% | 0% | ||||
AE Total Brand (1) | 3% | -1% | ||||
aerie Total Brand (1) | 26% | 13% | ||||
Fiscal Year | ||||||
Comparable Sales | ||||||
2015 | 2014 | |||||
American Eagle Outfitters, Inc. (1) | 7% | -5% | ||||
AE Total Brand (1) | 7% | -6% | ||||
aerie Total Brand (1) | 20% | 6% |
(1) AEO Direct is included in consolidated and total brand comparable
sales.
AMERICAN EAGLE OUTFITTERS, INC. | ||||||||
STORE INFORMATION | ||||||||
(unaudited) | ||||||||
Fourth Quarter | Fiscal Year | Fiscal 2016 | ||||||
2015 | 2015 | Guidance | ||||||
Consolidated stores at beginning of period | 1,068 | 1,056 | 1,047 | |||||
Consolidated stores opened during the period | ||||||||
AE Brand | – | 21 | 15-20 | |||||
aerie | – | 1 | 10 | |||||
Tailgate Clothing Co. | 1 | 1 | 1-2 | |||||
Consolidated stores closed during the period | ||||||||
AE Brand | (21) | (27) | (30) – (35) | |||||
aerie | (1) | (5) | (15) | |||||
Total consolidated stores at end of period | 1,047 | 1,047 | 1,028-1,029 | |||||
Stores remodeled and refurbished during the period | 4 | 28 | 55 – 65 | |||||
Total gross square footage at end of period | 6,601,112 | 6,601,112 | Not Provided | |||||
International license locations at end of period (1) | 141 | 141 | 174 |
(1) International license locations are not included in the consolidated
store data or the total gross square footage calculation.
Contacts
American Eagle Outfitters, Inc.
Kristen Zaccagnini, 412-432-3300